Stocks sink, bonds soar on fears coronavirus will stunt economy

Coronavirus

Traders Andrew Silverman, left, and Sal Suarino work on the floor of the New York Stock Exchange, Tuesday, Feb. 25, 2020. Stocks opened slightly higher on Wall Street as the market claws back some of the ground it lost in a dramatic sell-off a day earlier. (AP Photo/Richard Drew)

Stocks fell sharply again on Wall Street Tuesday, piling on losses a day after the market’s biggest drop in two years as fears spread that the growing virus outbreak will put the brakes on the global economy.

Nervous investors snapped up low-risk U.S. government bonds, sending the yield on the 10-year Treasury note to a record low.

The S&P 500 has lost 7.6% in the last four days since hitting a record high last Wednesday. That’s the benchmark index’s worst such stretch since the end of 2018, resulting in $2.14 trillion in losses, according to S&P Global. Tuesday also marked the first back-to-back 3% losses for the index since the summer of 2015.

The latest wave of selling came as more companies, including United Airlines and Mastercard, warned that the outbreak will hurt their finances, and more cases were reported in Europe and the Middle East, far outside the epicenter in China. Meanwhile, U.S. health officials called on Americans to be prepared for the disease to spread in the United States, where there are currently just a few dozen cases.

The Dow Jones Industrial Average dropped 879 points, for a two-day loss of 1,911 points. Travel-related stocks took another drubbing, bringing the two-day loss for American Airlines to 16.9%. The large publicly traded cruise operators have also suffered double-digit losses.

The worst-case scenario for investors — where the virus spreads around the world and cripples supply chains and the global economy — hasn’t changed in the last few weeks. But the probability of it happening has risen, said Yung-Yu Ma, chief investment strategist at BMO Wealth Management.

“It’s the combination of South Korea, Japan, Italy and even Iran” reporting virus cases, Ma said. “That really woke up the market.”

The S&P 500 index fell 3%, the Dow lost 3.2% and the Nasdaq dropped 2.8%, erasing its gains for the year.

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